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 After returning its verdict in favor of Merck on Tuesday, the jury
in San Jose, California immediately began hearing evidence on how
much Gilead owes Merck for infringing the patents.
Bruce Genderson, an attorney for Merck, said the company is seeking
a 10 percent royalty on Gilead's U.S. sales of nearly $21 billion
for 2014 and 2015.
Merck has also asked for a royalty of 10 percent going forward on
Gilead's blockbuster hepatitis C drugs Sovaldi and Harvoni, which
generated $19.2 billion in worldwide sales last year.
Following the verdict, Gilead shares fell $1.92 to $91.80 in
after-hours trading. Merck rose 57 cents to $53.60.
In a statement, Gilead spokeswoman Michele Rest said, "Although we
are disappointed by the jury’s verdict today, there are a number of
remaining issues to be decided by the jury and the judge." She
declined to comment on any potential appeal.
A spokeswoman for Merck said the verdict "accurately reflects the
evidence in this case."
The trial, which began on March 7, came as pharmaceutical companies
race to capture a slice of the lucrative market for the newest
hepatitis C treatments, which can cure well over 90 percent of
patients with the liver disease.
Insurers, politicians and patient groups have denounced the list
prices of the drugs. Harvoni, at $1,125 per pill before discounts,
costs $94,000 for a 12-week regimen. In January, the U.S. Food and
Drug Administration approved Merck's Zepatier drug.
In 2013 Merck contacted Gilead saying the active ingredient in
Gilead's drugs, sofosbuvir, infringed Merck's patents, according to
court papers.
Foster City, California-based Gilead then asked the U.S. District
Court for the Northern District of California in San Jose to declare
the patents invalid, saying they do not clearly describe any disease
fighting effects. Merck, based in Kenilworth, New Jersey,
countersued for infringement.
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Gilead said in court filings that Merck played no role in
sofosbuvir's discovery, but that when its breakthrough potential
became clear, "Merck came knocking on Gilead’s door with its two
patents in hand."
Last month, U.S. District Judge Beth Labson Freeman ruled that the
sale and use of Gilead's drugs infringe Merck's patents.
Michael Yee, biotech analyst for RBC Capital Markets, said "while it
does not sound good that Gilead could theoretically owe billions of
dollars in financial damages...it is a small amount relative to
Gilead's $127 billion market cap."
He said he expected Gilead to appeal.
The case is Gilead Sciences, Inc v Merck & Co, Inc, in the U.S.
District Court for the Northern District of California, No.
13-cv-4057.
(Reporting by Andrew Chung in New York and Rory Carroll in San Jose;
additional reporting by Bill Berkrot; Editing by Alexia Garamfalvi,
Chris Reese and Diane Craft)
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